Obama's Tax Hike For Wealthy—Why Young Should Embrace It
Here's a reason for anybody under 30 to love President-Elect Obama's plan to raise taxes on the well-off that I bet you've never heard before: it will create better job opportunities for those of us near the bottom of the career ladder. How does that work?
In any Economics 101 class they'll teach you that when you tax workers' incomes at higher rates, which is what Obama plans to do for individuals making more than $200,000 a year and two-income families making more than $250,000a year they do less work.
A tax-hike works like a pay-cut, and people work less if they're getting paid less. Here's the thing, when you're talking about workers making more than $200,000 a year, that doesn't mean they just cut back on their hours. Jobs that pay that well don't pay by the hour.
So when the economists say people will work less if you raise their income taxes, what's that mean for the highest earners among us, people who are overwhelmingly older? It means, at the margin, that they'll retire more frequently than they would have if taxes were lower, at least, as long as they can afford to retire.
More people at the top of the ladder retiring means more promotions for those of us who are on the lower rungs. Forget about redistributing the wealth, higher taxes on high earners should lead to better jobs for young people like us who are waiting for our elders to retire so we can work our way up the corporate food chain.
Lower taxes on high-earners mean that the old-folks are more likely to stick around as long as they can, and I have a sense that's been happening under the Bush regime. To switch metaphors, when taxes on the wealthy are low, they keep working, acting like somebody who refuses to get off the up-escalator after reaching the top, and that means less opportunity for younger people who are waiting at the bottom of the up-escalator.
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Usually when people make the argument that higher taxes on the wealthy will cause more highly-skilled workers to do less work, they act like that's a bad thing. Not me. Those jobs are held by older workers, and they need to be vacated to make room for my generation. If you're part of the millennial generation like me, you should want high- earners to be taxed at a higher rate, so they'll retire and you can take their jobs, or the jobs under their jobs as everyone gets to climb up another rung on the corporate ladder. Rising taxes on the rich lift all but the wealthiest ships.
When we're all making over $200,000 a year, then we can turn on Obama's tax plan, but until then it's pure opportunity.
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